“The use of ‘scare tactics’ by an insurance representative to discourage the filing of claims cannot be condoned. Such actions are certainly clear and convincing evidence of oppression and justify the imposition of punitive damages.” Liberty Mut. Ins. Co. v. Parkinson, 487 N.E.2d 162, 166 (Ind. Ct. App. 1985).

The opinion of the Indiana Court of Appeals in Liberty Mutual predated the Indiana Supreme Court’s specific recognition of the tort of bad faith in Erie v. Hickman by eight years but the holding stands to this day as good law. It is obvious bad faith for an insurance company to use “scare tactics” to try to get out of paying an insurance claim, and Indiana law provides for compensatory and punitive damages when they do it.

We are seeing an increase in the number of cases where insureds are being subjected to lengthy interrogations by the “special investigation unit”, and in a few of those cases the investigator has gone so far as to use scare tactics to try to convince the insured to drop their claim. If this happens to you or someone you know, they should immediately seek legal representation. As the Indiana Court of Appeals observed, such tactics are evidence of “oppression.”

It is one thing for an insurance investigator to question an insured about legitimate concerns that may affect coverage for a loss. There are many examples of questions that can be asked — and must ordinarily be answered — in the case law dealing with bad faith claim handling practices, but threats and intimidation cross the line every time.